Are you a landlord and your tenant receives Universal Credit you will start to realise how quickly things can spiral out of control. Universal Credit was introduced in 2013 to simplify the welfare system but it has actually made things worse and can cause rental arrears to become out of hand.
The MUST KNOW tips for universal credit:
– Getting Universal Credit paid directly to yourself
– Receive third party deductions from your tenant’s Universal Credit to reduce their arrears
– How to increase your rent by up to 30%
To get payment directly you need to apply for “Alternative Payment Arrangements” (APA) which simply means getting the rent paid directly to the landlord.
APA can be considered at any point during the Universal Credit claim and direct payments are generally given for the following reasons:
- Mental health issues
- Learning difficulties
- Addiction problems
- Previously homeless
- Rent arrears of more than 2 months
Rental arrears of more than 2 months? You must complete this UC47 form, see link below.
Tick the “managed payment to landlord” box and complete the form to get payment direct. You will need a full copy of your rental account to include in the form to prove that your tenant is in more than 2 months in arrears.
How to receive third party deductions from your tenant’s Universal Credit to reduce their arrears
On the first page of the form is a tick box to get “third party deductions” you should tick this
if you wish to receive a “top up” from the tenant’s benefits to reduce the arrears.
Want to know how to potentially increase your rent by 30%?
This is direct from the government’s website regarding Universal Credit:
“For private rented sector tenants, their Universal Credit additional amount for housing costs will be whichever is lower out of their actual costs or the Local Housing Allowance rate”.
This means your tenant will receive as the rental element of their Universal Credit as the lower of their rent or the Local Housing Allowance (LHA) rate. If your rent is lower than the LHA rate then your tenant is receiving less than the maximum allowable which also means you are.
To determine if your rent is less than the LHA rate and potentially needs increasing, you need to work out the number of bedrooms your tenant can claim for. This is NOT based on the number of bedrooms in your property but the make-up of the family living there. This website below calculates the number of bedrooms your tenant is eligible for and also the maximum LHA you could receive. This is also the maximum you could receive as part of your Universal Credit payment.